Contemporary Business and Online Commerce Law 7th Edition by Henry R Cheeseman

Exercise 1

Commercial Speech

Mainstream Marketing Services, Inc. v. Federal Trade Commission and Federal Communications Commission

358 F.3d 1228, Web 2004 U.S. App. Lexis 2564 (2004)

United States Court of Appeals for the Tenth Circuit

“The national do-not-call registry offers consumers a tool with which they can protect their homes against intrusions that Congress has determined to be particularly invasive.”

—Judge Ebel

Facts

Pursuant to enabling statutes, two federal administrative agencies—the Federal Trade Commission (FTC) and the Federal Communications Commission (FCC)—created the national do-not-call registry. The national do-not-call registry is a list that contains the personal telephone numbers of telephone users who have voluntarily placed themselves on this list, indicating that they do not want to receive unsolicited calls from commercial telemarketers. Commercial telemarketers are prohibited from calling phone numbers that have been placed on the do-not-call registry. Telemarketers must pay an annual fee to access the phone numbers on the registry so that they can delete those numbers from their solicitation lists. The national do-not-call registry restrictions apply only to telemarketers’ calls made by or on behalf of sellers of goods or services. Charitable and fundraising calls are exempt from the do-not-call registry’s restrictions. Persons who do not voluntarily place their phone numbers on the do-not-call registry may still receive unsolicited telemarketers’ calls.

Mainstream Marketing Services, Inc., and other telemarketers sued the FTC and the FCC in several lawsuits, alleging that their free speech rights were violated and that the do-not-call registry was unconstitutional. The FTC and FCC defended the list, arguing that unsolicited telemarketing calls constituted commercial speech that could properly be regulated by the government’s do-not-call registry’s restrictions. The separate lawsuits were consolidated for appeal.

Issue

Are unsolicited telemarketing calls commercial speech that is constitutionally regulated by the do-not-call registry restrictions?

Language of the Court

Four key aspects of the do-not-call registry convince us that it is consistent with First Amendment requirements. First, the list restricts only core commercial speech—i.e., commercial sales calls. Second, the do-not-call registry targets speech that invades the privacy ofthe home, a personal sanctuary that enjoys a unique status in our constitutional jurisprudence. Third, the do-not-call registry is an opt-in program that puts the choice of whether or not to restrict commercial calls entirely in the hands of consumers. Fourth, the do-not-call registry materially furthers the government’s interests in combating the danger of abusive telemarketing and preventing the invasion of consumer privacy, blocking a significant number ofthe calls that cause these problems.

The challenged regulations do not hinder any business’ ability to contact consumers by other means, such as through direct mailings or other forms of advertising. The national do-not-call registry offers consumers a tool with which they can protect their homes against intrusions that Congress has determined to be particularly invasive.

For the reasons discussed above, the government has asserted substantial interests to be served by the do-not-call registry (privacy and consumer protection), the do-not-call registry will directly advance those interests by banning a substantial amount of unwanted telemarketing calls, and the regulation is narrowly tailored because its opt-in feature ensures that it does not restrict any speech directed at a willing listener. In other words, the do-not-call registry bears a reasonable fit with the purposes the government sought to advance. Therefore, it is consistent with the limits the First Amendment imposes on laws restricting commercial speech.

Decision

The U.S. Supreme Court held that unsolicited telemarketing calls constituted commercial speech that was subject to government regulation and that the do-not-call registry restrictions did not violate the free speech rights of the plaintiff telemarketers.

Case Questions

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Critical Legal Thinking What is the do-not-call registry? How does it work?

Ethics Is it ethical for telemarketers to make unsolicited phone calls to persons’houses? What time are some of these calls made? Is much fraud committed by telemarketers? Explain.

Contemporary Business What is the economic effect of the do-not-call registry on telemarketers?